Case Study: Enjoy a Guaranteed Lifetime Income and Reduce Your Taxes in Retirement

Tom Justice is a 59-year-old chemical engineer who has three major concerns about his retirement plan…

His first concern is about outliving his retirement savings

He’s read the statistics and knows that in spite of experiencing the longest bull market in history, the average 65-year-old will outlive their savings by almost a decade, according to the World Economic Forum.

Tom doesn’t have anywhere near the amount of savings recommended by many experts. According to the “Rule of 25,” you should have 25 times your total annual expenses saved by the time you retire if you don’t want to run out money.

Tom wants to live on at least $100,000 a year, which means he needs at least $2.5 million saved up. And that’s a far cry from the $750,000 he’s managed to save in his 401(k)… and it’s all invested in a stock market that he knows is past due for a major market crash.

Tom’s second concern is he believes tax rates can only go up over the long term


He worries about the big tax bite he’ll be facing when he retires and starts taking withdrawals from his 401(k). He’s beginning to realize that he has only postponed paying his taxes. Much like putting off a visit to the dentist, it’s only going to make the situation worse.

Tom realizes he could easily fork over 30%-50% of his savings to the IRS.

Tom’s third concern is about the Required Minimum Distributions (RMDs) he’ll have to start taking in his early 70s

Tom’s CPA warned him about how seniors are finding themselves in the highest tax bracket of their lives once they have to start taking RMDs.  And the idea that he’ll also have to pay taxes on his Social Security benefits really makes him mad. It just doesn’t seem fair!

Tom loves his career and wants to continue working as long as he can. He was relieved when his Bank On Yourself Authorized Advisor proposed a creative solution to all three of his concerns, based on his goals and objectives…

Tom could roll his 401(k) balance into a fixed indexed IRA annuity, with a “guaranteed lifetime income rider.” Tom could take annual withdrawals from his annuity and use this money to fund a Bank On Yourself-type high cash value, dividend-paying whole life policy. Doing this could reduce his RMD problem and his future tax burden. And Tom could also create an income stream he wouldn’t outlive.

Here’s the Solution Tom’s Bank On Yourself Authorized Advisor Proposed to Solve All THREE of Tom’s Concerns:

Step 1: Tom transfers the $750,000 in his 401(k) into an IRA fixed indexed annuity.

Step 2: The following year, Tom activates the increasing income rider feature on his annuity and withdraws $34,718 that year. With this rider on his annuity, Tom could have income that increases over time. Each increase would be locked in, and the income he receives from his annuity would never go down.

Step 3: Tom pays 25% of the first year’s withdrawal of $34,718 in income taxes that he had deferred, leaving him $26,039. Tom is still working as he planned and doesn’t need the money to live on, so he uses the money to fund the first year’s premium for a Bank On Yourself-type policy.

Step 4: The policy he purchases is called a “10-pay” policy, meaning that after 10 years, no more premiums are required. These policies make sense for anyone with a relatively short timeline to reach a goal or who doesn’t want to be committed to paying premiums beyond 10 years. People often start these policies as late as age 55 to 65 or even older, because you’re rarely “too old” to benefit from starting a whole life policy.

Step 5: After Tom funds his policy for 10 years with income he takes each year from his annuity, no more premiums are due.

Step 6: When Tom turns 70, he could start taking an additional $15,000 a year from the whole life policy until he’s nearly 100 years old(!), with no taxes due under current tax law.

Step 7: Due to the increasing income rider on Tom’s annuity, the income he takes from it could potentially grow to $58,108 a year by the time he’s 70. When added to the $15,000 income he could take from his Bank On Yourself-type policy (based on current dividends), his total income could be $73,108 a year – plus he’d have Social Security. And the income he takes from his policy does not subject him to taxation on his Social Security benefit.

Step 8: Tom could enjoy an increasing income from the annuity – even if he lives to age 105 or beyond – which gives him the peace of mind he craves.

So What’s the Bottom Line?

By age 96, Tom could receive a total of $3,980,700. This is $2.5 million more than he would have received had he left the money in his 401(k), conservatively invested in the market earning 5% a year (since he’s close to retirement, he would have avoided aggressive investments), paid a typical management fee, and started taking RMDs when required (paying taxes on those withdrawals at the then-current tax rates).

Tom is a very happy camper knowing that he no longer has to worry about RMDs pushing him into a higher tax bracket or that he’ll outlive his money!

But What if Your Situation is Different?

I can promise you that your situation IS different from Tom’s. You may be older or younger than 59. You may have more or less saved for retirement. You may make more or less money. You may have a special needs child or aging parents to support.

You may be close to your planned retirement date… or be decades away, or you could already be retired. You could be in great health or poor health.

It Doesn’t Matter! A Program Can Be Custom-Tailored to Help You Reach Your Financial Goals and Dreams

Literally hundreds of factors are taken into consideration when a Bank On Yourself Authorized Advisor builds a custom-tailored program for a client. No two are alike. And the most important numbers aren’t the ones described here, but the ones that could apply to your unique situation.

To find out what your bottom-line numbers and results could be, request an Analysis here right now. You’ll get a referral to a Bank On Yourself Authorized Advisor who can answer all your questions and show you how to gain the financial security and peace of mind that you want and deserve.

Please don’t put it off another day! There is no cost or obligation for your Analysis, so click here now to get started:

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